Infrastructure bonds would be good SMSF fit

An SMSF strategy specialist has predicted a solid investment opportunity may soon exist for SMSF members if the government decides to issue specific bonds to help fund the infrastructure projects announced in last night’s federal budget.

“Don’t be surprised if the government releases infrastructure bonds for the new Sydney airport,” @GrantSMSF founder Grant Abbott said during a post-budget webinar.

“I’d recommend the government issue an infrastructure bond for SMSFs. These types of bonds would be prime for SMSFs because they’d give a guaranteed return over a 25 or 30-year period.”

Abbott acknowledged the government’s attempt to address the housing affordability issue among Australians, but said an alternative method might have been preferable.

He revealed the SMSF Members Association had provided the government with a different approach to tackle the problem.

“Quite often a first home owner’s deposit will be coming from the individual’s parents.

We find a lot of people who want to get into their first homes need their parents’ support to solve the issue of affordability,” he noted.

“A lot of parents have their money sitting in superannuation, so why not facilitate a loan that is an exception to the in-house assets rule allowing a parent to lend for a first home deposit?” he proposed.

“It would be secured by a second mortgage of course and it would have to have market-value interest rates.”

He suggested that method would be more efficient as it would allow the readily available funds to go directly to the individuals needing assistance to pay the deposit on their first home.